Lynas Ready To Rock ‘n’ Roll For Longer

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This story features LYNAS RARE EARTHS LIMITED.
For more info SHARE ANALYSIS: LYC
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

Lynas Rare Earths remains a buy as recent consolidation below its peak clears resistance and sets the stock up to trend towards new highs, Fairmont Equities' Michael Gable reports.

By Michael Gable 

There is not much else to say about the oil situation that hasn’t already been said by someone else.

We only can re-iterate our view from before the war that oil and commodity prices were going up this year, and when the current volatility dies down, that upwards path would resume.

Price action in our market during the past week has not only been very volatile, but apart from oil stocks, movements elsewhere can appear counter intuitive.

That is, why, in this environment, has gold eased off but tech stocks edged higher?

One theory is that it is a sign of deleveraging.

Large positions are being reduced at the same time by fund managers to just reduce their overall exposure to “risk”.

This means that you see gold being sold, and short positions in tech stocks are being cashed in.

Covering a short position involves buying back the stock, hence why tech stocks are being “bought”.

We do not believe it is because they are very cheap or offer a great opportunity down here.

We suspect that prior trends will resume shortly, leading to gold and other commodities heading higher, and tech stocks heading lower.

Today we offer a technical view on Lynas Rare Earths ((LYC))

We last looked at Lynas Rare Earths on 6 January when it was trading at $12.97 and commented that:

“With volatility having exited the stock, it was just a matter of time of waiting for the next breakout and uptick in volatility to occur.

“That happened yesterday and this is now a buying opportunity. We expect a substantial rally from here.”

Since then, Lynas has traded higher in a sustainable manner, where it rallied strongly for a short period of time before consolidating the move.

Although it is near the recent peak, the recent share price consolidations, in our opinion, have given profit takers a chance to exit along the way.

This means that resistance near the recent peak should be fairly light and Lynas should be able to continue trending to new highs from here.

Lynas remains a buy at current levels.

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services. 

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
 

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